Measures for sustained profitable growth
Since 2001 the economic conditions prevalent in the passive electronic components market have in some cases changed dramatically and worldwide competition has become increasingly fiercer. “Globalization has hit EPCOS – a company rooted in a high-cost region – very hard indeed,” said Gerhard Pegam. “That is why we are called on to adapt, to change quickly, comprehensively and continuously.” At the top of EPCOS’ agenda in 2006 is a catalog of measures whose purpose is to quickly return the company to sustained profitable growth.
In 2006
The absolute top priority in the short term is the improvement of the earnings situation. This includes a rapid and successful transfer of the tantalum business to KEMET and the elimination of the current process problems at Ceramic Components. Within the framework of the COMPETE program EPCOS will continue to cut costs and improve the quality of all production processes, products and services. Moreover, EPCOS will increase the efficiency of research and development activities, thus strengthening the company’s innovativeness. Sales of new products – such as piezo actuators, multilayer ceramic modules and further miniaturized surface acoustic wave filters – will grow over-proportionately.
Taking all these considerations together, EPCOS confirms its forecast that continuing operations – i.e. excluding tantalum capacitors – will return to sales growth, positive EBIT and a significantly positive net cash flow in this fiscal year.
Medium term
In order to master the challenges of globalized competition in the long term, and to attain a leading position on the global market, EPCOS will increasingly require externally-supported growth as well.
In the coming years EPCOS will be looking for partners – preferably with their home base in Asia – to help anchor the company more firmly in this growth region. Such reinforcement can be accomplished in the form of reverse integration, cooperation, joint ventures, acquisitions or mergers. In particular, EPCOS will focus on partnerships in the following technology and product areas: ceramic standard components, inductors and electrolytic capacitors. Moreover, EPCOS will intensify its efforts to identify new fields of activity to add to the existing technology portfolio.
Appropriation of net income
The agenda of the Annual General Meeting proposes that the unappropriated net income of EPCOS AG amounting to EUR 49 million be carried forward.
About EPCOS
EPCOS AG, a manufacturer of passive electronic components headquartered in Munich, is market leader in Europe and number two worldwide. EPCOS offers a comprehensive portfolio of about 40,000 different products. The EPCOS Group has design, manufacturing and marketing facilities in Europe, the Americas and Asia.
Passive electronic components are found in every electrical and electronic product – from automotive and industrial electronics through information and communications to consumer electronics. Components from EPCOS store electrical energy, select frequencies, and protect against overvoltage and overcurrent.
In fiscal 2005 (October 1, 2004, to September 30, 2005), EPCOS posted sales of EUR 1.24 billion. At September 30, 2005, the company employed about 16,100 people worldwide.
N.B. All financial data has been compiled to US GAAP and is not audited except for data at September 30, 2005.
Further dates
Results for the second quarter of fiscal 2006 will be published on May 4, 2006.
This document may contain forward-looking statements with respect to EPCOS’ financial condition, results of operations, business, strategy and plans. In particular, statements using the words “expects”, “anticipates” and similar expressions, and statements with regard to management goals and objectives, expected or targeted revenue and expense data, or trends in results of operations or margins are forward-looking in nature. Such statements are based on a number of assumptions that could ultimately prove inaccurate, and are subject to a number of risk factors, including changes in our customers’ industries, slower growth in significant markets, changes in our relationships with our principal shareholders, the ability to realize cost reductions and operating efficiencies without unduly disrupting business operations, currency fluctuations, unforeseen environmental obligations, and general economic and business conditions. EPCOS does not assume any obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise. Further information on factors which could affect the Company’s financial results is provided in documents filed with the Bundesanstalt für Finanzdienstleistungsaufsicht and the US Securities and Exchange Commission.
